First Published 16th January 2013

£5 million Centre for Macroeconomics to research global economic crisis and help design policies to alleviate it

Christopher Pissarides, London School of Economics

"It became obvious soon after the start of the financial crisis that we did not have the tools to understand it, and were consequently less able to recommend policies to combat it."

London - A new £5 million Centre
for Macroeconomics will bring together a group of experts to
carry out research on the global economic crisis and help design
policies to alleviate it.

Chaired by LSE's Nobel Prize-winning economics professor,
Christopher Pissarides, the new centre will encompass experts
from the London School of Economics and Political Science (LSE),
University College London (UCL), Cambridge University, the Bank
of England, the National Institute of Economic and Social
Research (NIESR), and other institutions.

Five research programmes will address the key issues of
unemployment, fiscal austerity, financial markets, shifts in the
world economy, and the development of new methodologies. It is
hoped that new methodologies and better communication with policy
makers will enhance the research and will lead to better policy
decisions.

Professor Pissarides commented: "The new centre will be engaged
in path-breaking research that gets to the heart of current
debates and puzzles about the economy and the on-going recession.
It became obvious soon after the start of the financial crisis
that we did not have the tools to understand it, and were
consequently less able to recommend policies to combat it. It
also became obvious to us that globalisation and financial
development had changed the nature of macroeconomic fluctuations,
requiring many different skills within macroeconomics. The new
centre is bringing together a diverse group of top experts in the
field, who will work together to shed light on the very
complicated set of problems facing policy makers today."

The centre is being funded by the Economic and Social Research
Council (ESRC), the UK's largest funder of research on economic
and social issues.

The centre's co-directors are Wouter Den Haan, Professor of
Economics at LSE, and Morten O. Ravn, Professor of Economics at
UCL.

Professor Ravn commented: "Over the past five years unemployment,
fiscal austerity and instability in financial markets have posed
serious challenges for the UK and much of the world economy. New
research and better communication between economists is needed to
address them. Our foremost aims are for the centre to provide
first-rate research into macroeconomic aspects of these issues
and to provide leadership and focus for UK macroeconomists and
their interaction with policy makers. The centre will give policy
makers access to cutting edge research and provide academics with
stimulus from policy circles."

Professor Den Haan commented: "We will not be shy in exploring
new approaches to the questions currently facing us. We hope to
develop economic models that are better suited to deal with large
shocks like those we recently experienced and that can better
capture the complexity of the real world."

This press release can be found at:
http://www2.lse.ac.uk/newsAndMedia/news/archives/2013/01/New-Centre-for-Macroeconomics-launched-at-LSE.aspx

The ESRC has also announced today that it will be funding a new
Systemic Risk Centre at LSE to study the risks that could trigger
the next financial crisis. For more information, please go to
http://www2.lse.ac.uk/newsAndMedia/news/archives/2013/01/SystemicRiskCentreLaunch.aspx